Four (4) industry shifts that retailers like Walmart and Kroger are experimenting with that will impact category management roles in the future

August 26, 2020 | By HIVERY

Retailers nowadays are facing challenges in the form of trend shifts, behavioural changes and technological advancements.

This is why a commitment to continuous renewal and transformation is a must to remain competitive in the market. Therefore, it’s also important for retailers to ramp up their processes, teams and relationships.

To help you understand the true implications of our industry’s current trends, here are some insights around how retailers are responding.

How do retailers respond to the waves of change?

For retailers to hit their target and remain relevant to consumers, they must proactively adapt to the changes and innovations in the industry.

The following approaches are some of the strategies they implement to keep their business up and running amidst the evolving retail landscape.

1. Dealing with the competitive squeeze

Discount stores like Aldi are invading the US market, increasing retail competition. Traditional grocers like Walmart have been able to observe that there is almost a 10% difference between their gross and net operating margins to those comparable discount grocers – leaving them under pressure to compete.

In addition to this, retailers have to consider the impact of Amazon and their kind of infinite assortment offering that customers nowadays are beginning to expect.

And while physical retailers continue to invest in in-store experiences, better product mix which may provide lower returns in the short run, the hope that they remain relevant to customers in the long run. In fact, Kroger into expanded into restaurant business with Kitchen 1883 and private-label clothing line.

Nevertheless, labor is a major factor they can continuously utilize in the short term to alleviate margin pressure. For example, Walmart is starting to renovate their stores by eliminating the need for humans to operate cash registers on the front-end, instead automating their check-out process as well as streamline operations with robots. According to Forbes story, Walmart will bring on board thousands of robots in nearly 5,000 of its 11,348 stores. However the “New Retail” capabilities consumers require of retailers (e.g. Buy Online, Pick-Up in Store (BOPIS), curbside pickup, etc.) are all putting additional a strain on in-store operating models.

2. Facilitating the role of space

It can’t be denied that labor is impacting the utilization of retailers’ spaces. 

As such, category managers are being faced with various decisions about how retail stores can be outlined in the best ways. For example:

  1. Labor vs holding power vs assortment – if you have more days of supply, you don’t need to stock frequently. However, having more days of supply also means you’ll be pushing assortment out of your stores.
  2. Floor (space for customer) vs backroom vs fulfilment – Where should your store’s square footage be allocated? In the case of Walmart, they have been increasing their backroom space in order to provide fulfilment that will not interfere with their customers’ shopping experience. 

Because the range of assortment is becoming more compressed than ever, the bottom line here lies in the need for retailers to coordinate with powerful, innovative brands and partners.

To move forward rapidly, retailers must have great partners to collaborate with.

3. Working with a digital merchant

We are anticipating fewer, focused merchants nowadays because of the current trends we are seeing in the industry. 

Artificial Intelligence (AI) and automation are disrupting the supply chain, modular planograming and merchandising - eliminating the need for more people in those jobs. In fact, Walmart had a huge layoff only recently. That was one of their largest in years.

The inclusion of things like “Negotiation Chat-Bots” such as Pactum or Skype Mafia and companies like RangeMe who also becoming more revolutionary in managing what is brought and stocked in their stores. These ordering bots can essentially automate ordering;  eliminating the need for “category managers” or influence from CPG suppliers.

hey serve as a good way to understand different products and manufacturers in the market, while allowing for more efficient communications. 

Additionally, buyer-less line reviews and assortments are now being facilitated via technology. You can only imagine how important it is for merchants to evolve their skills to remain relevant and strategic.

4. Understanding the importance of an advisors’ evolution

Optimizing the retail process involves having fewer heads who carry greater scope of responsibilities. Most often, retailers make such adjustments with their category management teams. 

For one, being equipped with an in-house data science team means category managers like you can get helpful insights that will allow you to understand algorithms and systems well. 

Meanwhile, planogram operators must go beyond their roles to become strategic consultants. It means being able to leverage processes and strategy to draw specific planograms within minutes, rather than months. To do this, they have to master the 4 Ps of merchandising: placement, products, promotion and price.

What does this mean to category managers like you, then?

It means embracing technology to enhance your store’s processes, without isolating relationships and access. This also involves understanding that both roles of humans and technology are important – retailers needing AI and automation to accelerate their operations, while having thought leader partners to get optimized analysis and results.

The opportunity to differentiate has never been greater - so don’t waste this chance by resisting change.

How can HIVERY help you?

HIVERY is the pioneer of hyper-local retailing, combining artificial intelligence, optimization and design to help CPGs and retailers generate an increased return on physical retail space investment. 

Our product, HIVERY Curate, is the world’s first truly hyper-local category management solution, offering the simultaneous optimization of assortment and space for each unique store. It’s powerful and continuously learning AI-driven engine optimizes generates rapid category strategies, insights and actions to take around product assortments, space and planograms generation.

More information about HIVERY Curate and other HIVERY solutions

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